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Acadian employs structured stock and peer group valuation models that are customized to each market. These models are designed to capture a broad range of characteristics such as valuation, earnings potential, financial quality and price movements. Stock factors are used to assess how well each stock in our universe is likely to perform relative to its peer group. We also apply separate models to forecast peer group returns, and then add a peer group forecast to each stock forecast.
A proprietary methodology combines the factor data and determines a return forecast for each stock. The end result is a ranking of the entire 25,000-stock universe from most to least attractive. We then use a sophisticated portfolio optimization system to trade off the expected return of the stocks with such considerations as the client’s benchmark index, desired level of risk, transaction cost estimates and other requirements. Country and sector weights fall out of the bottom-up stock selection process, with overall portfolio risk control ensuring the desired level of diversification.
The last step of the process is a careful review of optimized portfolios by the investment team before trading, to ensure the portfolio meets our client’s investment goals.
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Acadian
seeks to
evaluate
the largest
possible
set of
opportunities
in the most
disciplined,
unbiased
way possible
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